State budget report for Colorado found oil and gas sector activity is improving, though it's still low by relative standards. File photo by Gary C. Caskey/UPI. | License Photo
June 21 (UPI) -- Strains from contractions in the oil and gas sector in previous years are in the past, though Colorado's government reported only modest sector gains.
An economic outline from the governor's Office of State Planning and Budgeting said growth in Colorado accelerated in the first half of the year and expansion is expected to continue.
"Colorado reached two significant milestones this year -- the number one economy in the country and the state's lowest unemployment on record," Gov. John Hickenlooper said in a statement.
Colorado is rich in shale oil reserves, supplying about 3 percent of total U.S. crude oil production in large part from its Niobrara and Denver-Julesberg basins. Production quadrupled from 2010 to 2015, but slowed down last year because of the strains of lower crude oil prices.
Crude oil prices are about $5 per barrel, or more than 10 percent, lower than this date last year, though shale operators are becoming more resilient in the weakened market. Data published Friday by oilfield services company Baker Hughes show the rig count in Colorado at 36, more than twice what it was last year. Rig counts serve as a loose gauge of the appetite for spending on exploration and production in a particular sector.
"The oil and gas industry is now modestly adding to the expansion rather than weighing on economic activity," the state economic report read.
Pointing to a survey from the Federal Reserve Bank of Kansas City, the state said about a third of the regional energy companies were looking to hire over the next six months, against 13 percent who were anticipating layoffs.
Hickenlooper said the challenge now was to maintain that level of success. The state report found that, while oil and gas industry activity was on the rise, it was still low by relative standards.
In a defeat, the governor said he was disappointed that budget planners refused a request for $3.1 million in additional funds to keep a state energy office open.
Elsewhere, the state's gas sector was slowed following a deadly blast from a well in shale-rich Weld County. Anadarko Petroleum, which operated the well in question, responded to the incident in late April by closing down more than 3,000 wells in the county.